Pentasoft plans Rs 1050 crore private placement

Pentasoft plans Rs 1050 crore private placement
ENS ECONOMIC BUREAU

MUMBAI, FEB 1: Pentasoft Technologies Ltd (formerly Pentafour Communications Ltd) is planning to float India's largest private placement of 15 million shares worth Rs 1,050 crore. The company has appointed SBI Capital Markets as the sole arranger for the issue, which will be done through the book-building route.

The private placement is being done at a floor price of Rs 700 to finance company's acquisition of business software division of Pentamedia Graphics Ltd at a cost of $ 205 million, as per the valuation undertaken by PricewaterHouse Coopers. This division, having presence in banking, insurance and ERP, had a turnover of Rs 200 crore for the third-quarter. The acquisition price will be paid through a combination of cash and stock. In a news conference, Pentasoft Technologies Chairman V Chandrasekaran defended the price of Rs 700 on the performance grounds.

However, analysts felt the Rs 700 floor price was low when compared to the market price of Rs 819. ``Does the company require so much money?''said an analyst. According to Chandrasekaran, the funds will also be utilised for acquistions in Australia and the US and an expansion plan currently being worked out. "We will be using around $ 22 million for the working capital requirements," he said. The fund raising has been necessitated by the business reorganisation done for Pentamedia Graphics Ltd (earlier known as Pentafour Systems and Software Ltd) and Pentasoft Technologies while Pentamedia Graphics, a leading IT company in India particularly in the field of multi-media has decided to focus on its core area of providing multi-media solutions.

Pentasoft Technologies would focus on providing one stop IT solutions to facilitate the same and maximise the synergistic benefits with its current operations of system integration, and engineering services (cad/cam/gis and process control), Pentasoft Technologies Ltd has acquired the business software division of Pentamedia Graphics.

According to a company statement, PTL proposes to raise funds to meet thefinancing requirements of this acquisition and other acquisitions as also future expansion. During the third quarter, Pentasoft had a turnover of Rs 287 crore and a net profit of Rs 55 crore.